Archive for March 15th, 2012

CARSON CITY – Nevada barely earned a C grade for its efforts in providing online access to government spending data with a score of 70, according to the latest report: “Following the Money 2012”, released this week by a national group.

The report from the federation of state Public Interest Research Groups (PIRGs) ranked Nevada 31st among the states, with Texas coming in at No. 1 with a score of 98 and Idaho coming in last with a score of 6.

Following the Money 2012.

Nevada’s score declined slightly from the 2011 report when it earned a 74.

It is the U.S. PIRG Education Fund’s third annual ranking of states’ progress toward “Transparency 2.0” – a new standard of comprehensive, one-stop, one-click budget accountability and accessibility.

The report found that continued progress has been made over the past year, with new states providing online access to government spending information and several states pioneering new tools to further expand citizens’ access to spending information and engagement with government.

The release was timed to coincide with Sunshine Week, a national initiative to promote a dialogue about the importance of open government and freedom of information.

Nevada was identified as one of 14 “emerging states” with a C grade for its transparency website, which was described as having checkbook-level detail that is easily searchable, but that is far less comprehensive in terms of detail as the 21 states with A and B grades.

Nevada’s under-performing areas include the inability to search for information by a keyword or activity, only partial ability to obtain contract or summary information, a lack of access to tax expenditure reports, and the inability to download data.

State Budget Director Jeff Mohlenkamp discussed the new budget process, which was used to a limited extent in the 2011 budget, during a budget planning session today with state administrators. The new budget development process was required as a result of legislation passed in 2011.

One of the goals of the new budget process is to provide increased accountability of state government, he said.

Gov. Brian Sandoval has involved his entire cabinet in the process, which has identified four strategic priorities for his administration: sustainable and growing economy, educated and healthy citizenry, safe and livable communities, and efficient and responsive state government.

There are also eight core functions of government, from public safety to education and workforce development.

“Our goal throughout this process was to improve transparency,” Mohlenkamp said.

Change is not easy, he said.

“But major decision-makers in the state, starting with the governor, have put their weight behind moving Nevada forward,” Mohlenkamp said.

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Audio clips:

State Budget Director Jeff Mohlenkamp says the new budgeting process is about transparency:

CARSON CITY – Nevada’s top state administrators gathered together in meeting rooms and via the internet today to hear first-hand about Gov. Brian Sandoval’s initial plans for his 2013-15 budget.

The all-day meeting called “Budget Kickoff” was intended to provide instructions to state administrators on how to begin preparing their spending plans for the new two-year budget that will take effect on July 1, 2013.

Agencies are expected to see flat budgets compared to the current spending plan after Sandoval surprised many around the state on Tuesday by announcing he would extend an expiring package of tax increases into the next budget cycle to avoid any further cuts to education and critical social services.

In announcing his intentions, Sandoval said: “I’m not going to pit kindergartners against senior citizens. I’m not going to pit higher ed students against people that need essential services.”

Agencies are also being directed to prepare their spending proposals using the new Priorities and Performance Based Budgeting process required as a result of legislation approved in the 2011 legislative session.

While the next budget won’t take effect for more than 15 months, the planning process begins early. Sandoval must submit his proposed budget to the Legislature by January 2013 in advance of the February 2013 legislative session.

“You know how difficult the last couple of sessions have been, and you understand the depth and the breadth of the cuts to state spending,” said Heidi Gansert, Sandoval’s chief of staff, in introductory remarks to the assembled administrators. “You’ve also heard about the positive economic news in recent months. Sales tax collections are up. Gaming revenues are improving. Unemployment is slowly declining. All signs that Nevada’s economy is turning the corner.”

But Medicaid caseloads have tripled over the past decade and new costs are looming due to mandates from the federal health care law, she said. The ballot proposals being circulated to raise taxes are not an option as far as Sandoval is concerned, Gansert said.

By continuing the sunsetting taxes, no Nevadans will pay any more in taxes in the next budget than they are now, she said.

“The governor has said we will grow our way out of this recession and we will, it’s just going to take more time,” Gansert said.

She had some good news for state employees, noting that the unpaid furloughs, 2.5 percent salary reductions, frozen merit pay increases and the elimination of longevity pay are all under review for the next budget for restoration if possible.

Janet Rogers, an economist with the Budget Division, said the national economy is improving, but slowly, and Nevada is lagging behind.

“In the train that represents the national economy, Nevada is the caboose,” she said. “During the recession, for those of you who have been here, know, we had the largest employment drop of any state, the highest unemployment rate, the highest foreclosure rate and we were the last state to enter the recovery.”

State Budget Director Jeff Mohlenkamp talked about the potential impacts of the health care reform law, saying it will have a significant effect on the state’s Medicaid population.

The federal government is expected to pick up the costs of Medicaid recipients eligible under the law, but an influx of enrollees among residents who are already eligible for the health insurance program for low income, disabled and senior citizens is also expected, and these costs will have to be covered in part by the state, he said.

Nevada’s Medicaid caseload has increased from an average of 117,627 recipients in fiscal year 2001 to 285,732 in fiscal year 2011.

“Now the overall impacts of the health care reform aren’t clear,” Mohlenkamp said. “We don’t know what the number is going to be but we do know it’s significant, and we’ve done some broad estimations in our budget preparation.”

CARSON CITY – A new report questions the value of tax incentives and regulations approved by many states around the country, including Nevada, to create “green jobs,” noting that subsidies used for such programs can take away revenue for other needs such as public education.

“States face a hard and fast budget constraint; they cannot deficit spend or take on debt for general operating expenses,” said Bryan Leonard of State Budget Solutions in his report, “Green Jobs Don’t Grow on Trees.”

“This means that every dollar spent by states on green job training programs, grants to green firms, or subsidies for renewable energy producers is a dollar that cannot be spent on teachers’ salaries, educational tools, or social safety nets,” he said.

“Our study showed that green programs are incredibly expensive for states who aren’t in a position to know which investment will pay off and which won’t,” said Bob Williams, president of State Budget Solutions.

President Barack Obama views solar panels during a tour of the Photovoltaic Array at Nellis Air Force Base in Las Vegas with Sen. Harry Reid and Col. Howard Belote, base commander, May 27, 2009. (Official White House photo by Pete Souza)

Nevada State Office of Energy Director Stacey Crowley said she doesn’t necessarily agree with all the views of the article, but she noted that two of Leonard’s recommendations – to use Energy Service Companies (ESCOs) and allow for renewable power purchase agreements – are both being used in Nevada.

Private sector ESCOs contract to come into a client’s operation and find opportunities for energy savings, pay for the necessary renovations, and then receive some contracted portion of the resulting energy savings as compensation. Renewable power purchase agreements use private firms to install solar panels on a host’s property and the host purchases the resulting solar power at a contracted rate usually set at or below prevailing energy rates. The contracted firm bears all the cost and risk associated with the installation and maintenance of the solar equipment.

“It goes to show you that we are looking at as many options as we can to try to get projects funded in innovative ways that don’t use taxpayer money,” Crowley said. “It is a problem we need to try to address. And that is trying to get all energy projects, clean energy projects, done in a way that has the least impact on ratepayers and taxpayers as possible. So that’s a goal that I think everybody can agree on.”

The State Budge Solutions report examines each state’s green jobs statistics, including Nevada, where Leonard identified seven separate financial incentives for green jobs. Three of the seven are property tax exemptions.

Nevada also received just over $1.1 billion for “energy and environment” projects from its federal American Recovery and Reinvestment Act funding.

Leonard said Nevada came in 11th among states for such projects, meaning there has been a lot of investment by the federal government in green jobs in the state compared to others.

Nevada has also established a goal of having 25 percent of its energy consumption coming from alternative energy by 2025.

(Source: Green Jobs Don’t Grow on Trees)

Leonard said the average number of financial incentives is eight per state, with New York leading the way with 22 different incentives.

They range from tax credits and rebates for homeowners who install renewable energy systems or purchase Energy Star appliances, to multimillion dollar grants to wind farms and green manufacturing firms.

Tax credits are tricky because they add up quickly and create less obvious budgetary problems because they do not show up in the “expense” column and instead amount to foregone revenue,” he said in his report.

In a telephone interview, Leonard said: “Under certain circumstances is probably makes sense to do things that have real economic costs because it is important. But I think that it is just a pipe dream to think that you can enact these policies that raise the cost of doing business, raise energy costs, and somehow that is going to create economic growth.

“That’s the real problem right now is that there is this whole idea of the green economy, that we can improve environmental quality by raising costs on businesses and that somehow is going to create jobs. I think that is pretty counter-intuitive.”

Leonard said Nevada is in the middle of the pack of states for both policies and outcomes.

Crowley said the costs associated with tax breaks and regulations identified in the article don’t reflect “avoided costs,” like not having to build new and expensive power plants because of energy efficiencies. Other costs are associated with EPA regulations that can be avoided by producing clean energy, she said.

Crowley also noted that the subsidies provided for oil and natural gas far outweigh those given for alternative energy projects.

A little more than one year into the job, she said: “I am sure that there is a lot of potential here. What we need to do is just balance that with the other impacts that are affected by this. We’re very sensitive to the fact that rates are high in this state and that we need to make sure we’re doing the best we can to keep them reasonable. And there isn’t a silver bullet.”

Crowley said her office is working to help ensure green energy development in Nevada is sustainable and does not suffer the fate of the state’s housing market.

Leonard said in the conclusion of his article: “Green growth proponents are convinced that if they could only offer the right subsidies, their agenda would prevail. Unfortunately, subsidies are doomed to fail because they try to make fundamentally economic decisions through the political process.

“State officials, no matter how well-informed they are, simply don’t know what demand for green products will look like or what the opportunity cost of differently technologies may be. Examples like Solyndra, Evergreen Solar, and Cascade Grains illustrate the enormous costs when the government gets it wrong. Far from being the exception, failed investments are by far the more likely result when state governments try to steer the market.”

Nevada has seen a taxpayer funded green energy product fall on tough times as well.

Amonix reported in January that it was laying off about 200 people from its solar panel manufacturing plant in North Las Vegas. Amonix received $5.9 million in federal ARRA funding to build the plant, which opened in May, 2011.

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Audio clips:

Bryan Leonard of State Budget Solutions says it is a pipe dream to think policies that raise the cost of doing business will create economic growth: